In a recent EY report titled “If every energy transition is different, which course will accelerate yours?”, critical momentum in the changes to the global energy system is acknowledged, though the presence of several potential obstacles poses a significant risk to progress.
The report, which delves into the intricate dynamics of the energy landscape, identifies four key levers influencing the transition: technology advancement, commodity supply, consumer engagement, and government policy. A comprehensive analysis encompassing 52 technologies underscores the complexity and diversity characterizing the ongoing energy shifts worldwide.
Contrary to earlier expectations, the transition to renewables is unfolding at a swifter pace. The EY report projects that green energy will dominate global electricity generation by 2038, constituting 62% of the power mix by 2050. However, the report emphasizes that despite this progress, additional acceleration is imperative to meet the 1.5-degree Celsius global warming target.
Anticipating the need for substantial investments, the report suggests an estimated $4.1 trillion in annual funding for low carbon transition technologies and enabling energy infrastructure by 2050—a fourfold increase from current levels.
While forecasting a peak in fossil fuel use around the end of the decade, the report notes that hydrocarbons will linger in the energy mix due to challenges in hard-to-abate sectors. To address this, policies enhancing the appeal of low-carbon alternatives to investors are deemed necessary.
Serge Colle, EY Global Energy & Resources Leader, acknowledges the accelerating pace of change but warns of potential stalls due to the intricate nature of the challenges ahead. He notes that while progress in renewables and electrifying transport has been relatively straightforward, decarbonizing a predominantly hydrocarbon-powered industrial sector poses a more formidable challenge. Colle emphasizes the importance of activating various accelerators in each market to overcome inertia, sustain momentum, and meet climate targets.
